Is Mahindra & Mahindra planning to shrink Bolero for lower levies?

The plan is to ensure that the extra tax introduced on big-size SUVs does not apply on the rural workhorse that is still the company’s top selling modelKetan Thakkar | ET Bureau | March 29, 2016, 08:46 IST

Mahindra & Mahindra is quietly working on engineering solutions to produce smaller, more compact vehicles, as the nation’s top SUV maker tries to tackle new regulations that discourage large automobiles.

After taking the industry by surprise by launching the Scorpio and XUV 500 with a trimmed down engine within weeks of the Supreme Court suspending registration of diesel vehicles strapped with engines above 2 litres, Mahindra is now giving a makeover to the Bolero. The plan is to ensure that the extra tax introduced on big-size SUVs does not apply on the rural workhorse that is still the company’s top selling model.

It is developing a new Bolero that will stretch less than four metres and sport a 1.5-litre engine. The move will mean it will attract lower levies than the current model, which is 4.17-meter long and is powered by a 2.5-litre diesel engine.

Internally codenamed U108, the new Bolero will expand the subfour-metre utility vehicle range at M&M to four: Bolero, TUV 300, KUV 100 and Nuvo Sport, which will be launched shortly.

It is likely to be launched in the second half of 2016 and the company is working on a volume potential of 25,000 units a year. Interestingly, the U108 is an intermediate action plan from Mahindra to keep the brand alive before an all-new Bolero hits the market around 2018-19 to meet the new crash regulations.

A Mahindra spokesman said the company doesn’t comment on any future plans or products.

Despite being in the market for over a decade and half, Bolero continues to average around 7,000 units a month of sales, or about 30% of M&M’s monthly volume. Understanding the importance of keeping the brand alive, the company has come out with various interventions over the past decade. With this latest attempt, Mahindra is hoping to sustain volume momentum, said people in the know.

“This attempt may also help Mahindra make up for a partial margin loss on account of phasing out of incentives at Haridwar plant, without tinkering with the vehicle price. On the other hand, the new variant also helps in keeping the brand alive in the market,” said one of the several people in the know of the company’s plans.

According to them, the company has understood that product lifecycles are shrinking and it will have to rely on constant upgrades and facelifts on existing platforms to keep the brand ahead of ensuing competition, especially from Maruti Suzuki and Hyundai Motor India.

Apart from U108, Mahindra is also working on a 7-seat version of the TUV 300, called U302, to keep the action alive, before new products from its North America Technical Centre are ready by 2017-18. The products in the pipeline include the U321, which will compete with the Toyota Innova, as well as the U341.

“The U215, or all-new Quanto (now called Nuvo Sport), only has a lifecycle of 24-36 months,” said one of the four people in the know of the plans.